Yes, but only if you plan to occupy the property as your principal residence.
The Federal Housing Administration (FHA) is a part of the Department of Housing and Urban Development (HUD). The FHA has a goal of increasing homeownership among low-income and middle-income Americans.
To encourage it, the FHA insures certain loans made by lenders. The FHA does not make any loans itself. Because of the insurance, however, lenders are able to stretch a bit and loan money to people who might not otherwise qualify.
These loans are not limited to borrowers with credit problems or low income, but they do assist those who might otherwise not be able to obtain financing. Starting with loans made on or after January 1, 2008, the borrower-paid insurance premium will depend on your credit score.
The lower your credit score, the more you will pay to obtain the FHA insurance.
If there are financial blemishes in your life, the following are the requirements in addition to paying the insurance premium.
• Qualified borrowers must have been discharged from bankruptcy at least two years earlier, been paying on a Chapter 13 plan for at least twelve months, or had a foreclosure no more recently than three years earlier.
• All judgments must have been paid in full before closing, but collections accounts do not have to be paid if you have mitigating factors (a good excuse).
• Usually, you must have a history of four or more creditors with regular payments on your credit report. If you do not have that many, you can use evidence of timely rent payments, utilities, or car insurance.
The required down payment on an FHA-insured loan is usually only 3%, and the money can be a gift from someone else. There is an exception for homeowners who lost their property in regions declared a federal disaster area by the president. Those borrowers can obtain 100% financing.
Disaster victims do not have to buy property in the same area; they can relocate, if they want.